Aldi
is the common brand of two German family-owned discount supermarket chains with over
10,000 stores in 20 countries, and an estimated combined turnover of more than €50 billion.
Based in Germany, the chain was founded by brothers Karl and Theo Albrecht in 1946 when they took over their mother's store in Essen, which had been in operation since 1913. The business was split into two separate groups in 1960, that later became
Aldi Nord
, headquartered in Essen, and
Aldi Süd
In 1962, they introduced the name
Aldi
(an abbreviation for
Al
brecht
Di
skont), In Germany, Aldi Nord ZZand Aldi Süd have been financially and legally separate since 1966, although both divisions' names may appear as if they were a single enterprise with certain store brands or when negotiating with contractor companies. The formal business name is Aldi Einkauf GmbH & Compagnie, oHG. Aldi's German operations consist of Aldi Nord's 35 individual regional companies with about 2,500 stores in western, northern, and eastern Germany, and Aldi Süd's 32 regional companies with 1,600 stores in western and southern Germany. Internationally, Aldi Nord operates in Denmark, France, the Benelux countries, Portugal, Spain and Poland, while Aldi Süd operates in Ireland, Great Britain, Hungary, Switzerland, Australia, China, Italy, Austria and Slovenia. Both Aldi Nord and Aldi Süd also operate in the United States with 1,600 stores as of 2017.
History
baker's assistant. Karl Albrecht was born in 1920, Theo Albrecht in 1922. Theo Albrecht completed an apprenticeship in his mother's store, while Karl Albrecht worked in a delicatessen. Karl Albrecht took over a food shop formerly run by F. W. Judt who already advertised that they were the "cheapest food source". Karl Albrecht served in the German Army during World War II. In 1946, the brothers took over their mother's business and soon opened another retail outlet nearby.
By 1950, the Albrecht brothers owned 13 stores in the Ruhr Valley. The brothers' idea, which was new at the time, was to subtract the legal maximum rebate of 3% before sale. The market leaders at the time, which often were co-operatives, required their customers to collect rebate stamps, and to send them at regular intervals to reclaim their money. The Albrecht brothers also rigorously removed merchandise that did not sell from their shelves, cutting costs by neither advertising nor selling fresh produce, and keeping the size of their retail outlets small. The brothers split the company in 1960 over a dispute whether they should sell cigarettes. Karl believed that they would attract shoplifters while his brother did not. At the time, they jointly owned 300 shops with a cash flow of DM90 million yearly. In 1962, they introduced the name
Aldi
—
short for
Al
brecht-
Di
skont. Aldi Nord and Aldi Süd have been financially and legally separate since 1966, although both divisions' names may appear as if they were a single enterprise with certain store brands or when negotiating with contractor companies. The individual groups were originally owned and managed jointly by the brothers. Karl Albrecht, who died in 2014, retained ownership of Aldi Süd with a personal
wealth of €17.2 billion that made him
the richest man in Germany. The co-owners of Aldi Nord, Berthold and Theo Albrecht Jr. came close
behind at €16 billion. After Berthold's death,
Aldi Nord continues to be controlled by the Albrecht family through its Markus, Lukas and Jakobus foundations, which hold a combined 80.5 per cent of the company's issued capital.
Commented [D1]:
Karl & Theo are the sons
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Aldi started to expand internationally in 1967, when Aldi Süd acquired the grocery chain Hofer in Austria. Aldi Nord opened its first stores abroad in the Netherlands in 1973, and other countries followed. In 1976, Aldi opened its first store in the United States in Iowa, and, in 1979, Aldi Nord acquired Trader Joe's. After German reunification and the fall of the Iron Curtain, Aldi experienced a rapid expansion. The brothers retired as CEOs in 1993; control of the companies was placed in the hands of private family foundations, the Siepmann Foundation (Aldi Süd) and the Markus Foundation (Aldi Nord, Trader Joe's).
Business Organization
The Aldi Nord group currently consists of 35 independent regional branches with approximately 2,500
stores. Aldi Süd is made up of 31 companies with 1,600 stores. The border between their territories is
commonly known as ″Aldi
-
Äquator″ (literally: Aldi equator) and runs from the
Rhine via Mülheim an der Ruhr, Wermelskirchen, Marburg, Siegen, and Gießen east to just north of Fulda. The former East Germany is served by Aldi Nord, except for one Aldi Süd in Sonneberg, Thuringia, whose regional office is in Bavaria. The regional branches are organised as limited partnerships with a regional manager for each branch who reports directly to the head office in Essen (Aldi Nord) or Mülheim an der Ruhr (Aldi Süd). A survey conducted by the German market research institute Forsa found 95% of blue- collar workers, 88% of white-collar workers, 84% of public servants, and 80% of self-employed Germans shop at Aldi.
Business Practices
Some Aldi practices are common in German supermarkets but largely unique to Aldi in other countries. These include the system of metal gates and turnstiles forcing customers to exit through the checkout, and charging customers for shopping bags. Until 2004, Aldi stores accepted only cash (since then, German stores have accepted domestic Girocard debit cards). Debit cards also are accepted in the United States, Great Britain, Austria, Belgium, Denmark, France, Portugal, Spain, the Netherlands, Switzerland, Ireland, Australia, Slovenia, and Hungary. All four major credit cards are accepted in the United States as of 1 March 2016.
In-store layout
Aldi stores are noted as examples of so-called no-frills stores that often display a variety of items at discount prices, specializing in staple items, such as food, beverages, toilet paper, sanitary articles, and other inexpensive household items. Many of its products are own brands, with the number of other brands usually limited to a maximum of two for a given item. This increases sales for each article, and lets Aldi shops be smaller than stores with more brand choice. This practice let Aldi avoid price tags, even before the introduction of barcode scanners. On many of its own brands, if feasible, Aldi will place multiple barcodes on products to speed the check out process. Aldi mainly sells exclusively produced, custom-branded products (often very similar to and produced by
major brands
) with brand names including
Grandessa, Happy Farms, Millville, Simply Nature,
and
Fit & Active
. Branded products carried include HARIBO in Germany, Knoppers in Belgium and France, Marmite and Branston Pickle in Great Britain; and Vegemite and Milo in Australia. This is usually very strongly branded items, that in the past they have had difficulty in creating a generic version of the
Commented [D2]:
ALDI SUD- Green Colour , ALDI NORD
–
Yellow colour
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product. In the United States, major brand-name products, such as Oscar Mayer bacon, sometimes are offered as a 'special purchase': name-brand items that Aldi has received at a special price from the vendor and can offer for a reduced price. Unlike most shops, Aldi does not accept manufacturers' coupons, although some US stores successfully experimented with store coupons (e.g. $10 off a $25 purchase).` In addition to its standard assortment, Aldi has weekly special offers, some of them on more expensive products such as electronics, tools, appliances, or computers, usually from in-house electronics brand Medion and workzone brand for tools. Discount items can include: clothing, toys, flowers, and gifts. Specials have strict limits on quantities, and are for one week. Aldi's early computer offers in Germany (such as a Commodore 64 in 1987) resulted in those products selling out in a few hours. Aldi is the largest wine retailer in Germany. Some Australian stores now sell alcoholic beverages. Some US stores also sell alcoholic beverages (mainly beer and wine) where permitted by local and state laws. In March 2019, Aldi Süd launched a smaller format store in the UK called
Aldi Local
, with first store in Balham, southern London. The store has a slightly smaller number of products than a regular Aldi, with a preference for fresh products, has no trolleys instead having two sizes of baskets and without the notable "middle aisle" of weekly offers. In worldwide, none of all Aldi stores plays music. However, some stores in Scotland play Christmas music during December. Some of them have a PA system for announcements (not commercials) but most of them do not have any audio system. In The Netherlands and Belgium, Aldi also sells a-brands.
Reputation
Originally, Aldi shops were often ridiculed as being cheap shops selling low-quality goods, whose customers could not afford to shop elsewhere. In the United Kingdom, Aldi has won
Supermarket of the Year
two years in a row (2012/13),
[
and in 2013, Aldi won the Grocer of the Year Award. However, in February 2015, Aldi narrowly lost to Waitrose for the title of Supermarket of the Year 2015. In April 2015, Aldi overtook Waitrose to become the United Kingdom's sixth-largest supermarket chain.In February 2017, Aldi overtook Co-op to become the United Kingdom's fifth largest supermarket chain.
In May 2017, Aldi lost out to Marks & Spencer for the title of Supermarket of the Year 2017 (published by the magazine
Which?
).
In the United States, due to the relatively low staffing of Aldi locations compared to other supermarket chains, Aldi has a reputation of starting employees out at significantly higher than minimum wage, unusual among American supermarkets. In Ireland, Aldi has been accused of a
"lack of corporate responsibility" to their farmer suppliers by the Irish Farmers' Association.
United States
Aldi opened its first stores in the US in the rural Midwest in 1976; US headquarters and an accompanying warehouse were sited in Bavaria, Illinois. By the mid-1980s, Aldi operated 150 stores in the states of Indiana, Iowa, Kansas, Missouri and Wisconsin. Distribution centers were built in Kansas,
Iowa and Missouri. The company’s focus on private label products remains central to Aldi’s value proposition. Aldi’s prices could be delightfully, breathtakingly low. To maintain
fresh and timely delivery as it expanded, one US Aldi distribution center served every 55 states. Aldi planned to open 650 new stores by 2018, increasing its place of expansion from 80 to 130 new stores per year, investing $3 Billion in new land,
facilities and equipment and extending the company’s coverage from coast to coast.
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Aldi’s operations
A central operation of Aldi’s model was the ubiquity of private label brands in its stores ranging
from Frisco Dent toothpaste to LaMissa hot chocolate mix. Aldi exercised rigorous quality control over its private label items with daily sampling and lab tests. Despite consumer popularity, Aldi stores reflected the frugality of the founders. Product assortment, variety and pricing were decided centrally, limiting store manager independence. In fact Aldi offered only a limited selection among its limited assortment. The idea was that selling just one type of most items made it easier for a customer to decide on their purchases, speeding up shopping trips. Aldi stores turned over their inventory once each week on average and 90% of products were cross-docked at Aldi distribution centres from the delivering vendor to the distributing truck without entering inventory.
Walmart Walmart Inc.
is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores , headquartered in Bentonville, Arkansas.
The company was founded by Sam Walton in 1962 and incorporated on October 31, 1969. It also owns and operates Sam's Club retail warehouses.As of July 31, 2019,Walmart has 11,389 stores and clubs in 27 countries, operating under 55 different names. Walmart is the world's largest company by revenue, with US$514.405 billion, according to
Global 500 list in 2019. It is also the largest private employer in the world with 2.2 million employees. Walmart customers cite low prices as the most important reason for shopping there. The average U.S. Walmart customer's income is below the national average. Internal Walmart reports also indicated that Walmart customers are sensitive to higher utility costs and gas prices. Due to its prominence in the Bible Belt, Walmart is known for its "tradition of tailoring its service to churchgoing customers". In 2006, Walmart took steps to expand its U.S. customer base, announcing a modification in its U.S. stores from a "one-size-fits-all" merchandising strategy to one designed to "reflect each of six demographic groups
—
African-Americans, the affluent, empty-nesters, Hispanics, suburbanites, and rural residents. Around six months later, it unveiled a new slogan:
"Saving people money so they can live better lives"
. This reflects the three main groups into which Walmart categorizes its 200 million customers: "brand aspirationals" (people with low incomes who are obsessed with big name brands), "price-sensitive affluents" (wealthier shoppers who love deals), and "value-price shoppers" (people who like low prices and cannot afford much more). Walmart has also made steps to appeal to more liberal customers, for example, by rejecting the American Family Association's recommendations
Questions to think about:
1.
Should Aldi be worried about Wal Mart? Why or Why not? 2.
Should Wal Mart be worried about Aldi? Why or Why not? 3.
What is Aldi’s strategy?
4.
Should Aldi locate its stores close to WalMart? 5.
Should Aldi go online?
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